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German stakeholders doubt power plant strategy passing

German stakeholders doubt power plant strategy passing

London, 3 December (Argus) — The collapse of the German government on 6 November has led to uncertainty over the future of Germany's power market, particularly with regards to the passing of the power plant strategy (KWSG) before federal elections scheduled for 23 February. Under the power plant strategy, economic and climate ministry BMWK proposed tenders for the construction of 12.5GW of power plant capacity and 500MW of long-term storage over the next few years. This includes 10GW of hydrogen-ready gas-fired capacity, of which 5GW was planned to be offered next year, with the government aiming to hold tenders in early 2025 . Renewables association BEE announced on 26 November that BMWK had submitted a KWSG draft for industry consultation over 72 hours, indicating the minority government's urgent desire to enact the law before the elections. Incumbent energy minister Robert Habeck previously said politicians from the opposition CDU party had been "constantly" writing letters to ask when the power plant strategy would "finally" be passed. But the deputy head of the CDU/CSU, Jens Spahn, told an industry event last week that owing to the former coalition's sidelining of the opposition when drawing up the strategy, the CDU/CSU cannot be expected to support it. Utility EnBW told Argus in November that it expects the KWSG to be "supported" under the next government owing to a cross-party consensus on the need for more capacity. EnBW said it would be prepared to take part in the tenders "if the conditions allow it", whereas utility Leag told Argus that while "considerable progress" had been made in its preparations for the tenders, it is unable to do anything "concrete" until the regulatory framework has been clarified. But it voiced doubts over whether the KWSG will be passed before the elections. And utility RWE told Argus that while it would not "speculate" on the KWSG's passing, it will "not put planning efforts on hold" and will "proceed as usual" in its preparations. Vattenfall declined to comment, while Uniper was not immediately available. At an electricity market forum hosted by the country's four transmission system operators last month, grid regulator Bnetza's Tobias Lengner-Ludwig said that Bnetza and potential investors will need at least six months to prepare for the tenders, which could cause further delays. But in its position paper on the KWSG in response to BMWK's consultation, energy and water association BDEW said investing in the tenders in their current form is unattractive, as risks are too high owing to a potential lack of hydrogen supply, possible delays in the setting up of hydrogen infrastructure and short implementation timeframes. And while BEE told Argus that it does not expect the KWSG to be passed in this legislative period, it is not demanding its passage, as it views the proposal to invest in hydrogen-ready gas-fired plants unfavourably. Such a strong commitment to hydrogen risks fossil fuel lock-ins and high electricity prices, it said, particularly owing to the initially limited availability of green hydrogen. It said the government should focus on adding flexible renewable capacity by maximising the potential of existing sources, including hydropower, geothermal, battery storage and combined heat and power. German solar association BSW told Argus that alternatives to conventional generation — such as flexible bioenergy and storage systems — should be expanded to add dispatchable capacity. Even if the KWSG were passed in this legislative period, it would only have an impact in the early 2030s, it said. While clean spark spreads for lower-efficiency units for each year to 2027 have remained mostly negative this year, clean spark spreads for higher-efficiency units for 2025 turned negative in September after being in the money for most of 2024. And clean spark spreads for higher-efficiency units for 2026 and 2027 have averaged around €0.25/MWh and minus €1.40/MWh this year, despite the latter almost consistently being positive since the start of September. By Bea Leverett and John Horstmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.